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Specified Acquisition Agreement Representations

As a general rule, contractual consents are not included in a letter of commitment as a condition of conclusion. Where a materialistic contract requires authorization to execute the acquisition, the purchaser should insist that a condition of conclusion requires the seller to obtain such consent in the sales contract. If this condition of conclusion is included in the sales contract, lenders can indirectly benefit by asserting that waiving such a condition is an amendment to the sales contract that requires their consent. All consents that can only be required by the financing and not the acquisition itself. B as a landlord`s access contract or a subordination, dysfunction or atornation agreement, are usually the obligations of the borrower after the conclusion instead of concluding the financing terms. Parties may endeavour to reduce the conditionality of documentation by referring to existing documentation and/or documentation principles. For example, parties may indicate that financing documents are based on a specific credit contract (often the borrower`s current credit facility) or on a specific case of market accuracy. In addition, the principles of documentation can more easily refer to the precedent of private equity sponsors, or even to a precedent for a particular private equity sponsor. Sometimes documentary principles can be qualified, regardless of the starting point, by factors such as market conditions and the borrower`s operational or strategic requirements. For more information on documentation principles, please see the documentation principles and standard rules: Principles of Documentation (Commitment Papers).

The exact content and extent of these basic submissions (known as SunGard or specified representations) varies from agreement to agreement depending on the nature of the acquired business and the negotiating leverage of the parties. In particular, in the case of transactions in smes, lenders with different results may request the involvement of other representations (for example. B no substantial administrative or contractual consents or substantial litigation) than certain representations. However, SunGard`s core concept is now included in almost all commitment documents for public financing of acquisitions and many sme acquisition financings and even weaker in the middle market. Indeed, in recent years, private equity sponsors and borrowers have succeeded in including provisions in incremental facilities that essentially foreshadow SunGard`s conditionality for future incremental commitments that can be used to finance purchases. As noted above, it is common for private equity acquisitions to provide a portion of the financing of acquisitions in the form of a capital contribution. A typical sector of such a capital contribution is currently about 20% to 35% of the borrower`s pro forma capitalization on the reference date. Therefore, it is customary for acquisition financing securities used to finance a private equity acquisition to have a condition requiring the acquisition of equity. If a portion of the counterparty`s share takes the form of preferred shares or other debt instruments, it is likely that lenders will be satisfied with the terms of these instruments. See section 6 of the “Annex” appendix form to the Letters of Commitment – Conditions. A closing condition of EBITDA requires a minimum amount of EBITDA for a period of 12 months prior to closing; this period is usually the 12-month period from the last monthly closing submitted to lenders.

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